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Michael3
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on ‎20 August 2018 01:42 PM

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When you mention you need to have received the funds before signing a contract. Does that refer to the notice of how much will be released when applying or actually having the funds in your account after the 25 working days ?


Also, it was mentioned it would not be worth it if you were to sign a contract before hand as it was taxed....

Does that mean if you were to receive $10,000 release but signed a contract between applying and the funds actually being released. The total tax of 20% would be $2000? I don't quite understand how it would not be worth it ?

Could you please explain this for me and others ?

In case of apply for the release and getting a figure, then signing a contract during the process of release of funds.. would that incur the tax penalty you mentioned or would it be fine ?

Thanks for your time

Regards
Mick
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Anonymous

on ‎20 August 2018 02:24 PM - last edited on ‎17 September 2019 12:40 PM by

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Hi Mick,

 

The 20% FHSS penalty tax is on top of the FHSS release tax ... so its an additional tax and that tax once applied will put you back to where you were before you placed your funds into the scheme and therefor the scheme is of no benefit to you at all as you will end up with the same amount of funds.

 

Have a look at this post for calc of the standard FHSS release tax ..https://community.ato.gov.au/t5/General-tax-questions/Tax-on-FHSS/td-p/2779

 

As per previous post you must wait for the funds to be released by the ATO before you sign a contract.  If you sign at anytime before and that includes during the processing of the application the FHSS additional penalty tax will apply.

 

Have a look at this post for discussion about the 20% penalty tax and when funds are released by ATO, and also has links to ATO ruling about the FHSS scheme that discusses the penalty tax and more.

https://community.ato.gov.au/t5/General-super-questions/Signed-a-contract-just-before-applying-for-F...

 

If you need further assistance with the FHSS scheme I suggest contacting the ATO early engagement team so you can personally speak with an ATO officer that hopefully knows what they are talking about. You can submit an early engangement request by:

 

If you use the ATO general enquiry line you will only hear what is on the ATO website as they are instructed to read from pre-prepared scripts.

 

ATO phone 13 10 20

 

 

 

 

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Most helpful response

Anonymous

on ‎20 August 2018 02:24 PM - last edited on ‎17 September 2019 12:40 PM by

Replies 0

Hi Mick,

 

The 20% FHSS penalty tax is on top of the FHSS release tax ... so its an additional tax and that tax once applied will put you back to where you were before you placed your funds into the scheme and therefor the scheme is of no benefit to you at all as you will end up with the same amount of funds.

 

Have a look at this post for calc of the standard FHSS release tax ..https://community.ato.gov.au/t5/General-tax-questions/Tax-on-FHSS/td-p/2779

 

As per previous post you must wait for the funds to be released by the ATO before you sign a contract.  If you sign at anytime before and that includes during the processing of the application the FHSS additional penalty tax will apply.

 

Have a look at this post for discussion about the 20% penalty tax and when funds are released by ATO, and also has links to ATO ruling about the FHSS scheme that discusses the penalty tax and more.

https://community.ato.gov.au/t5/General-super-questions/Signed-a-contract-just-before-applying-for-F...

 

If you need further assistance with the FHSS scheme I suggest contacting the ATO early engagement team so you can personally speak with an ATO officer that hopefully knows what they are talking about. You can submit an early engangement request by:

 

If you use the ATO general enquiry line you will only hear what is on the ATO website as they are instructed to read from pre-prepared scripts.

 

ATO phone 13 10 20

 

 

 

 

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